BlackBerry posts surprise profit, but subscriber base down

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A Blackberry Z10 is displayed at a store in Toronto in this February 5, 2013 file photograph. BlackBerry announced better than expected results on March 28, 2013, driven by demand for its new touchscreen device which holds the key to a successful turnaround for the smartphone maker. REUTERS/Mark Blinch/Files

TORONTO — BlackBerry reported a surprise quarterly profit on Thursday, but its subscriber base fell slightly more than expected, and revenue remained far below year-earlier levels.

The smartphone maker’s shares were down 1.4 percent at $14.35 in trading before the market opened, reversing a jump of as much as 10 percent just after the results came out.

The Waterloo, Ontario-based company said it sold about 1 million of its new Z10 touchscreen smartphones in the fourth quarter ended March 2. It shipped roughly 6 million smartphones in that time.

“I think the 1 million units is a nice start,” said Morningstar analyst Brian Colello. “I think the encouraging thing is that BlackBerry was still able to sell a good portion of older models and generate solid service revenue during the transition. I think that will be important in terms of cash balance and profitability.”

The Z10 is the first in a line of devices powered by BlackBerry’s new BB10 operating system. It is a key part of the company’s attempt to regain relevance and win back market share in the smartphone arena that it once dominated.

The company also surprised investors by saying it believes it will approach break-even financial results in its first quarter, based on a lower cost base, more efficient supply chain and improved hardware margins.

Analysts on average had been expecting a loss of 10 cents a share in the first quarter, according to Thomson Reuters I/B/E/S.

BlackBerry said net income in the fourth quarter was $98 million, or 19 cents a share, compared with a year-earlier loss of $125 million, or 24 cents a share.

Analysts had expected the company to report a loss in the quarter.

Yet the company, which has lost market share to rivals like Apple (AAPL), is far from out of the woods. Quarterly revenue fell to $2.68 billion from $4.2 billion a year earlier.

Subscriber numbers also slipped, to about 76 million from 79 million as of Dec. 1.

BlackBerry said Mike Lazaridis, who co-founded BlackBerry nearly 30 years ago, would step down as vice chairman and a director. Lazaridis was co-chief executive officer until last year.